Types of Assets on a Balance Sheet
A company's balance sheet reveals valuable information about its assets, liabilities and shareholders' equity. Also called a statement of financial position, a balance sheet incorporates various types of assets that accountants commonly group in two categories: long term and short term. Other corporate financial statements are income statements, cash-flow statements and equity reports.
Other People Are Reading
-
Cash and Cash Equivalents
-
Cash and cash equivalents are a firm's economic lifeblood, the resources allowing the business to fund operating activities, repay debts and finance long-term initiatives. Cash is a short-term asset, meaning the organization will likely use it to cover expenses in the next 12 months.
Short-Term Investments
-
Businesses often diversify their revenue mix by engaging in other activities that are outside their primary line of commerce. These peripheral activities may relate to investments in financial markets, also known as stock exchanges or securities markets. Short-term investments, or marketable securities, include stocks and bonds.
-
Accounts Receivable, Net of Allowance
-
All businesses rely on sales to chart a viable commercial strategy and reach their financial zenith. Customer receivables, a short-term asset, represent amounts that clients owe a company. Financial managers show the customer-receivables account "net of allowance," meaning they present it after deducting bad debt expense. This represents amounts the firm believes it may not collect from clients.
Inventory
-
Inventories are substantial assets in a corporate balance sheet, especially for manufacturing firms. A short-term asset, merchandise includes raw materials, work-in-process inventories and completely finished goods. Accountants record inventory at the lowest market value, a method they call "lower of cost or market."
Property, Plant and Equipment
-
The "property, plant and equipment," or PPE, account regroups a company's long-term assets, also known as fixed resources or tangible assets. Examples include land, commercial buildings, residential settings, factory machinery and production equipment.
Held-to-maturity Securities
-
Held-to-maturity securities are long-term investment assets that a company buys, with the purpose of keeping them in its balance sheet until they become due. These assets are usually fixed-income securities, such as traditional bonds and convertible debentures.
Available-for-sale Securities
-
Available-for-sale instruments are assets an organization purchases for a speculative purpose. The company primarily monitors market developments and sells when conditions are favorable. The goal is to derive extra income to supplement corporate core revenues.
Intangible Assets
-
Intangible assets lack physical substance, unlike merchandise or long-term resources. In other words, these assets are marketable though not material. Examples include goodwill, patents, copyrights and trademarks. Accountants use the term "amortization" to describe how they spread the value of intangible assets over several years.
Other Assets
-
The "other assets" section of a balance sheet includes all resources that are neither short-term nor long-term assets. An example is equipment that a company has decided to dispose of, but for which it has not found a buyer.
-
